This popular piece of plastic helps some shoppers avoid overspending--but beware of its hidden costs and risks

Americans are carrying record amounts of debt--and seem determined to do something about it. Two recent studies from Dove Consulting and the American Bankers Association show that credit cards have been overtaken by debit cards as the plastic of choice. Some 26% of consumers now pay for most purchases with debit cards, which draw money directly and immediately from their checking accounts, while 21% mainly use credit cards and pay some portion of the bill when it arrives.

Why is this happening? Consumers, feeling less flush than they did in recent years, say using a debit card helps them manage their...